Franklin Templeton likely to approach SC over Karnataka HC order

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New Delhi, Oct 25 | Franklin Templeton India may appeal in the Supreme Court against the Karnataka High Court’s order regarding the winding up of the six schemes.

In a letter to the investors, Sanjay Sapre, President, Franklin Templeton Asset Management (India) Pvt Ltd said that the company will also seek directions from the court regarding return of cash of over Rs 5,200 crore currently accumulated in the four cash positive schemes, and with regard to any additional cash it may receive while the matter remains under the consideration of the court.

“While we are still in the process of studying the order, basis our initial review, we believe it may be necessary to appeal aspects of the order in the Supreme Court,” Sapre told the investors.

The Karnataka high court on Saturday directed Franklin Templeton India not to proceed with the winding up of its debt schemes without obtaining the consent of investors. Franklin Templeton Mutual Fund shut down six of its debt mutual funds in April, citing the difficult conditions in the bond market amid the pandemic.

In the letter, Sapre noted that in the court’s order Regulation 39 to 42 of the SEBI (Mutual Funds) Regulations 1996 (which specifically deal with winding up of schemes) have been held to be constitutionally valid and the court has upheld the decision taken by the trustee, to wind-up the schemes.

“However, as per the judgement, consent of the unit-holders will be required under regulation 18(15)(c) to operationalize the above decision,” he added.

The High Court stayed the operation of its judgement for six weeks, and the funds remain subject to winding up at this time, he noted.

“We are studying the order and will come back to you with additional details around the same if need be. In the interim, I urge you not to be swayed by speculation or rumour. We remain committed to communicating with you in a transparent manner and being responsive to your concerns and queries,” the letter said.

Source: IANS

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